Monthly archives: December 2011

Government plans to rush through cuts to solar tariff payments are illegal, the High Court ruled today (Wednesday 21 December), following a legal challenge by Friends of the Earth and two solar firms – Solarcentury and HomeSun.

The court agreed that proposals to cut feed-in tariff payments for any solar scheme completed after 12 December – 11 days before the official consultation closed – were unlawful.

Friends of the Earth is urging the Government to come up with a new proposal which would allow solar payments to fall in line with reduced installation costs, while ensuring the solar industry continues to play a key part in developing a cleaner future.

The environmental campaigning charity is also calling for more money to encourage solar installations – paid for by the revenue the industry raises for the Treasury, the removal of planned restrictions that would prevent poorer households from installing solar panels and more support for community-owned schemes.

The Government’s own independent advisors say the economy must be weaned off of increasingly expensive fossil fuels like gas by investing in clean energy and slashing energy waste. Friends of the Earth’s Final Demand campaign is urging the Government to launch an investigation into the role of the Big Six energy firms in stopping people in Britain having energy we can all afford.

Friends of the Earth’s Executive Director Andy Atkins said:

“These botched and illegal plans have cast a huge shadow over the solar industry, jeopardising thousands of jobs.

“Ministers must now come up with a sensible plan that protects the UK’s solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy.”

“Solar payments should fall in line with falling installation costs but the speed of the Government’s proposals threatened to devastate the entire industry.”

Friends of the Earth is urging the Government to re-think its plans to slash payments for solar electricity schemes today (Monday 12 December 2011), as the rush to install solar payments ahead of a crucial payment deadline comes to an end.

The Government has halved the payments for any solar electricity scheme completed from today, which will almost double the payback period for homes, businesses and communities.

Later this week (Thursday 15 December 2011) Friends of the Earth and two solar companies – Solarcentury and HomeSun – will ask the High Court for permission to challenge Government plans to cut the payments.

The premature cuts could cost up to 29,000 jobs and lose the Treasury up to £230 million a year in tax income, a report commissioned by Friends of the Earth and Cut Don’t Kill – an alliance of solar firms and consumer and environmental organisations – revealed last month. Earlier this month construction firm Carillion warned 4,500 workers their jobs are at risk because of the Government’s proposals.

“These Government cuts will cast a huge shadow over our thriving solar industry and pull the plug on thousands of jobs.

“We don’t oppose modest payment cuts in line with falling installation costs – but the size and speed of these proposals will decimate an industry that could play a key role in weaning the nation off of expensive fossil fuels.

“Ministers must think again and give their support to an industry that could and should be at the cutting edge of a clean energy revolution.”

We stand presently in a state of transition. At the time of writing this article, the most lucrative residential solar power incentive ever to be offered in the United Kingdom is days from being cut in half. So what does this mean for those still considering purchasing a solar energy system for their home or property? Will the new rates kill off the residential market completely, or is there some tangible evidence of the investment remaining economically worthwhile? Let’s take a look.

The new rates have been announced and the primary one to focus on for all residential sized installations is the now reduced Generation Tariff:

4kW and >4kW Installations: 21 pence per kWh generated

This adds to the other two incentives that come from a) saving energy otherwise bought from the grid and b) exporting surplus when over-producing. The Export Tariff rate remains at the negligibly effective 3 pence per kWh, but exporting simply isn’t going to happen in the vast majority of households and properties. Of more importance is the savings rate will continue to reflect the price you pay per kWh from your energy retailer. This currently stands on average of 13 pence for residential properties.

So all in all, let’s conservatively say we are going to be generating solar kWh’s worth:

(21p Generation + 13p Savings) 24 Pence per kWh

Whilst this is a significant reduction in the previous tariff rates, if a few other factors come into play then solar installations will remain a worthy investment for many thousands of people.

Let’s have a look at some other factors that may determine the feasibility of solar installations for thousands of people across the UK.

Areas of Development and Promise

Reduction in Upfront Capital Outlay

The first and most immediate change that we will see in the residential solar industry is a substantial reduction in upfront cost of purchasing a solar energy system. This will involve not only less profit margins for their own businesses but better rates at which they buy components, in-house adaptations for scaffolding and accounts to avoid external expenditure, streamlining sales and marketing and essentially running as efficiently as possible.

We expect this to account for anywhere between a 15% to 35% drop in prices by the time we arrive at late January 2012. This means the most price competitive are set to get as low as £8,500 or even better. This alone would catalyse returns on investment to reach back to their 8%-12% mark, easily trumping rates achievable with bank savings accounts or ISA’s. Ultimately this in itself is enough to recreate interest from large numbers of home and residential property owners, but let’s consider some other possibilities that may work in tandem.

Community Groups

It is a common retail and purchasing philosophy that buying more of something results in a better price per unit. Solar power installations for residential properties are not alienable from this. Community groups that are geographically localised have a significant advantage in that they can receive discounts by purchasing a solar energy system collectively. So long as a reputable and knowledgeable organisational arm is employed to do this work, comparisons can be made across the local installers and the best possible deal brokered. This lowers the upfront capital costs for all involved on often sliding scales up to 20%. Solar Community Organisers here at Solar Selections are experts at organising and facilitating such an effort. Contact us today for more information.

Remote Power Opportunities

Whilst the majority of the population live in relative proximity to power plants and the main grid, properties that are on islands or over mountains usually pay much higher rates for their energy. In Australia, our parent company Solar Choice invented a unique approach to assisting communities in some of the more isolated regions of the land down under. Because they were paying more for their energy, their systems saved them more and the returns on investment improved. If you’re unsure about how much you’re paying for your energy, have a look at your bills or contact your energy provider.

Finance

A solar power system is a very straightforward, low maintenance and low risk investment once installed, and bank and credit institutions across Europe are warming to this slowly. At this point in the UK there are several commercial opportunities for finance from groups such as Barclays. Over time, residential markets will present another opportunity for banks to lend money and charge interest so the market is expected to open up. More information on this will become available as it comes out.

Conclusion

These suggestions are merely a handful of methods that the residential solar industry will utilise to adapt to the tariff changes. By watching the pricing and ensuring potential customers investigate all of the best prices available, consider organising a community group and explore finance options, residential properties will find solar a worthwhile investment as soon as January 2012. For an up to date account of all the possibilities, contact Solar Selections today and speak to a dedicated member of staff.

The High Court has agreed to hear applications by Friends of the Earth and two solar companies – Solarcentury and HomeSun – for permission to challenge Government plans to slash financial incentives for solar electricity on Thursday 15 December 2011.

Confirmation of the hearing follows an earlier High Court ruling [Friday 25 November 2011] rejecting permission for a legal challenge. The organisations are now asking the High Court to reverse the decision and allow a hearing into the legal challenges as soon as possible.

Friends of the Earth is also asking the High Court to cap its potential legal costs for the case. International rules specify that costs should be limited in public interest cases on the environment.

The legal challenges centre around Government plans to slash feed-in tariff subsidies – payments made to households and communities that generate green electricity through solar panels – on any installations completed after 12 December this year. The Government is currently running a consultation into feed-in tariffs – but the 12 December cut-off point comes two weeks before the consultation ends. Friends of the Earth says this premature decision is unlawful and has already led to unfinished or planned projects being abandoned.

Solar is a growing, successful industry. The premature cuts could cost up to 29,000 jobs and lose the Treasury up to £230 million a year in tax income, a report commissioned by Friends of the Earth and Cut Don’t Kill – an alliance of solar firms and consumer and environmental organisations – revealed last month. Last week construction firm Carillion warned 4,500 workers their jobs are at risk because of the Government’s proposals.

Friends of the Earth’s Executive Director Andy Atkins said:

“We strongly believe Government plans to abruptly slash solar subsidies are illegal, we hope the High Court agrees to allow our case to be heard as soon as possible.

“We’ve also asked the High Court to cap our potential costs. International rules say this should be allowed in public interest cases on the environment – we can’t afford to bring a challenge if we face unlimited liability for the other side’s legal fees.

“In a time of economic gloom, the solar industry has been one of the UK’s brightest success stories, enabling homes and communities across the country to free themselves from expensive fossil fuels.

“It’s short sighted for Ministers to move the goalposts and prematurely pull the subsidy – this will cost tens of thousands of jobs, bankrupt businesses and reduce Treasury income by up to £230m a year.”